Shell Oil in Nigeria

1. What arguments did Shell make in defending its actions in Nigeria? How would Shell's critics counter these arguments? Do you believe Shell could or should have done anything differently in Nigeria?

Shell was accused of conspiring with the Nigerian government in executing the MOSOP leaders and Ken Saro Wiwa. This was reinforced when Shell refused to bail out the activists, using their influence in the government. Shell refused these allegations and stated that it had no role to play with the judiciary. It would be unfair for the company to interfere with justice system. In reflection, we believe that the company should have spoken out on humanitarian grounds to defend the victims.

Shells was accused of alliance with the Nigerian Military Forces and make regular payments to the military, to create conflict amongst the tribes, harass and beat protestors and force the people to sign no objection certificates inviting Shell to operate in Nigeria. Shell disassociated itself completely from these allegations and questioned their authenticity. However, it later admitted having made direct payments to the Nigerian security forces, on at least one occasion in 1993.

Shell was accused of purchasing arms for the use of the Nigerian Police. In response to these allegations, Shell stated that it had in the past imported side arms on behalf of the Nigerian police force, for use by Shell “supernumerary police” against general crime. The last purchase of weapons by Shell was said to be of 107 hand guns, 15 years before. But court papers filed in Lagos in July 1995 revealed that Shell had as late as February 1995 been negotiating for the purchase of weapons for the Nigerian police.

2. What internal or external factors contributed to the emergence of this crisis for Shell? Internal factors:Shell Company did not want military protection but when it became unsafe to operate, they paid police officers directly and were also responsible for supervising, training and equipping them. And Shell also defended this by saying that this is normal to retain police officers for the protection.External factors:When oil spill took place in the area, Shell failed to clean it as well as it was burned and crusted over which left the land barren. Shell located their pipeline and other infrastructure which was too close to human settlement.

3. Evaluate Shell's actions in Nigeria with reference to an existing code of conduct for multinational organizations. Do you believe Shell was in compliance with the code you have selected? If not, how not? Do you believe the code you have selected is appropriate and adequate?One of the code of conduct as mentioned in the Shell’s booklet of code of conduct towards society is “to conduct business as reasonable corporate members of society, to comply with applicable laws and regulations, to support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment.” According to the case, it doesn’t seem that Shell was in accordance to the code of

Presented By Amandeep Singh, Anirudh Sarda, Jyothi Kumari, Kuldeep Kumar & Shefali Sharma

conduct mentioned. Shell had major operation from Ogoniland (Nigeria), which was the site of great mineral wealth but they had received little benefit from its development.

Shell did not include the local residents in determining how the community development funds should be spent.

Shell was responsible for environmental degradation. Major oil spills by Shell which destroyed the ecosystem. Problem of gas flaring by Shell. The community suffered in poverty and faced issues like sanitation and water related

diseases despite having the capacity to be a wealthy community.

4. In your opinion, is it possible to develop a universal set of ethical standards for business, or do cultural differences make universal standards impractical, if not impossible?According to us, ethical standard is very relative term and it changes from business to business. There are no consistent set of standards available for all but each organization has the right to set their own standards. Each country has its own culture so ethical standards are to be defined in an alignment with culture of that country/organization. Standards set by one country may be vague in some other country. Problem in defining universal standards is that there are chances that these can be interpreted in a different way in each country. Though there are standards like treating people fairly and refraining from lying that can be set as universal standards but not all can be framed in a way that can universally be accepted.

5. What, if anything, should Shell do next?Based on this case study, we would advise Shell Group to take the following initiatives:

Revise and update their business principles to include human rights aspects. When taking business decisions, consult with interest groups, especially those dealing

with human rights, to discuss potential problems and best practices to overcome them. Establish a Corporate Social Responsibility Team to study the environmental and

social impacts of the business and make recommendations. Hire experts in environmental laws and labour laws to guide business decisions in

future. Devise training and awareness programs for managers to effectively resolve human

rights dilemma, in the course of business. Provide adequate compensation to the families of those affected directly, if possible

OR undertake public welfare initiatives to help the existing people of Ogoni region.